Brick-and-Mortar Retailers Can’t Afford Bad Experiences. Here’s Why.

These days, consumers aren’t coming to brick-and-mortar stores for the prices or the selection – they can usually find better alternatives to both online.

They’re coming for the experience.

Retailers are feeling the heat from shoppers’ favorite websites, and even their own omni-channel strategies. They are feeling increased pressure to provide something that can’t be reproduced online, something that’s worthy of a trip. That something is personalization, differentiation and the “hard-to-find” buy.

If that is a wake-up call to some of the readers of this post, then you need to remember: Brick-and-Mortar is the foundation of e-commerce.

I’ll say that again to ensure it sticks.

Brick-and-Mortar is the foundation of e-commerce.

It is important to acknowledge that shoppers actually find physical stores appealing—especially when we read all the hype about online and digital. Stores provide consumers with a sensory experience that allows them to touch and feel products, immerse in brand experiences, and engage with sales associates who provide tips and reaffirm shopper enthusiasm for their new purchases.

The store plays a crucial role in online purchases. According to a report by AT Kearney, there’s hard-hitting facts that backup the need for real estate:

  • 95 percent of all retail sales are captured by retailers with a brick-and-mortar presence
  • Two-thirds of consumers who purchase online use the store before or after the transaction

In these cases, the store makes a significant contribution to converting the sale, even though the transaction is at some point influenced online. In other words, the source of value creation (brand building, product awareness) is distinct—or decoupled—from the place of value capture. This is particularly important for retailers, as they consider resource allocation decisions across channels to ensure that the true value the physical store creates is accounted for properly.

It’s not physical or digital; it’s physical with digital. 

Multiple channels is good for business. And leveraging technology during the trip keeps the shopper engaged and excited. With a sharp increase of boomers using their devices while shopping, 30% more this year as reported by Nielsen, “personalized retail” is the necessary practice of providing an in-store experience that is tailored to each visitor – and it might be all some brick-and-mortar stores have left.

Personalizing the shopping experience for your customers can increase profit margins, strengthen customer loyalty and level the playing field with mobile and e-commerce.

Consumers select channels based on a broad range of criteria, from physical convenience to brand loyalty to the desire to be entertained or surprised. As a result, how and where consumer value is created and captured depends on the consumer’s preferences. That means retail presence needs to be accessible 24/7, 365, when and where the shopper is.

Brick-and-Mortar is challenged, but it’s not dead. 

Far from it, actually. According to a report last month by Nielsen, 70% of consumers’ purchase decisions are still made at the shelf. But coveted shelf space in stores is tight, especially in grocery—a typical grocery store can have 30,831 items. While SKU growth is outpacing sales growth, competition isn’t heated just because of more items on the shelf; shoppers are going to stores less and less. Trip frequency has decreased, on average, 19 trips per year since 2011.

Although retail has always been a tough industry, the competition has become even tougher over the course of the last decade. Survival depends on a satisfying customer service. Not to mention, as if Amazon.com wasn’t already hard to compete with, customers expect the same level of service that they receive from the leading shopping site… and they’ll go elsewhere if they don’t get it.

The top-6 barriers retail faces to enhance the shopper experience.

If a retailer is not aligned with price, promotion, assortment, and personalization, loyalty quickly fades with consumers.

Consumers not only want all of these things as part of their experience, but expect it. E-commerce offers this, so they don’t understand why physical cannot. A recent Infosys survey reported that 78 percent of consumers are more likely to be a repeat customer if a retailer provides them with targeted, personalized offers. Failing to provide this personalization will have the opposite result. The CMO Council reported that more than half of U.S. and Canadian consumers consider ending their loyalties to retailers who do not give tailored, relevant offers that are top-of-mind.

And they’re willing to pay for it, too, translating into a highly profitable experience for both the shopper and store. According to a RightNow Customer Impact Report, 86 percent of consumers will pay up to 25 percent more for a better customer experience.

Loyalty is just as valuable (if not more) as attracting new customers.

What do Kodak, Blockbuster, and Blackberry all have in common? They all became obsolete or less relevant because they failed to recognize and adapt to fundamental changes in their industries and maintain loyalty.

Business analytics have made it so that consumers expect retailers to know what they want without even telling them. And that’s the key to loyalty. Consumers now know that modern retailers have the capability to meet their growing expectations, and it’s up to them to take advantage of recent online and in-store transactions and other interactions. Consumers aren’t creeped out by retailer ability to collect this information – they encourage it so that you are able to offer them the things they are interested in.

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